Correlation Between Lowes Companies and Live Nation

Can any of the company-specific risk be diversified away by investing in both Lowes Companies and Live Nation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lowes Companies and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lowes Companies and Live Nation Entertainment,, you can compare the effects of market volatilities on Lowes Companies and Live Nation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lowes Companies with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and Live Nation.

Diversification Opportunities for Lowes Companies and Live Nation

0.18

Correlation Coefficient

Lowes Companies  Live Nation

Average diversification

The 3 months correlation between Lowes and Live is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and Live Nation Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertai and Lowes Companies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lowes Companies are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertai has no effect on the direction of Lowes Companies i.e., Lowes Companies and Live Nation go up and down completely randomly.

Pair Corralation between Lowes Companies and Live Nation

Assuming the 90 days trading horizon Lowes Companies is expected to under-perform the Live Nation. In addition to that, Lowes Companies is 1.16 times more volatile than Live Nation Entertainment,. It trades about -0.22 of its total potential returns per unit of risk. Live Nation Entertainment, is currently generating about -0.09 per unit of volatility. If you would invest  16,304  in Live Nation Entertainment, on October 11, 2024 and sell it today you would lose (464.00) from holding Live Nation Entertainment, or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Lowes Companies  vs.  Live Nation Entertainment,

Lowes Companies

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Lowes Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Live Nation Entertai

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment, are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Live Nation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lowes Companies and Live Nation

The main advantage of trading using opposite Lowes Companies and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, Live Nation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Live Nation will offset losses from the drop in Live Nation's long position.

The idea behind Lowes Companies and Live Nation Entertainment, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..